1.

Tax Definition
Law No. 28 Year 2007 of General Provisions and Tax Procedures
Payable mandatory contribution to the state of the individual or entity, which is coercive
under the Law, without any direct return and shall be utilized for the need of the state for
the greatest prosperity of the people.
Own definition
Payable compulsory contribution to the state by tax payer (individual or entity) that is
enforced by the law without any direct benefit in return to be utilized for the prosperity of
the people.

2. Tax Functions, definition and example

Budgeter Function = Tax can be used as an instrument to raise the revenue for state
budget need. Example: In 2016, tax revenue is accounting for up to 80% (1459 trillion) of
total 2000 trillion revenue.
Regulerend function = Tax can be used as an instrument to control the society living.
Example: Higher tax on luxurious goods, progressive tax rate for personal income tax
payer. VAT for export reduced to 0%, specific income tax for specific industries (steel,
automotive, paper, cement, pharmacy, etc.), tax amnesty or tax incentive

3. Tax classification --> classification, nature, jurisdiction, definition and example

Direct tax: Tax where payers are responsible to pay his own tax. They can’t transfer their
obligation to someone else. Example: Income tax.
Indirect tax: Tax where payers can transfer their obligation to another party. Example:
Land and building tax, vehicle tax, VAT.
Subjective tax: Tax where calculation depends on tax subject condition. Different
subject can have different number. Example: Income tax.
Objective tax: Tax where calculation depends on object condition. Ex: VAT & Land and
building tax.
Local tax: Tax that is administered by the Local Government (Local Revenue
Office/Dinas Pendapatan Daerah) at both the province and the city/municipality. Rules
may be different between cities. Ex: Vehicle tax, Hotel tax, restaurant tax.
Central Government tax: Tax that is administered by the Central Government in this
regard managed by the Directorate General of Tax Indonesia (DGT) where the rule is
same for all Indonesians. Ex: Income tax, VAT, sales tax on luxurious goods (PPnBM),
L&B tax, stamp duty, etc.

4. Tax laws classifications --> material tax laws and formal tax laws --> definition and
example
Material tax laws: Tax laws regarding subject, object, tariff, calculation mechanism, tax
liable, collection and or payment mechanism, etc. Ex: Income tax law & VAT tax law.
Formal tax laws: Tax laws regarding General Provisions and Tax Procedures (Ketentuan
Umun dan Tata Cara Pajak). Ex: The General Tax Provisions and Procedures Law (UU
KUP).
5. Tax collection principle --> four canon of taxation (ECEC) Adam Smith + 3 additional:
PVP --> definition and explanation
Equality: The canon of equality or equity implies that the burden of taxation must be
distributed equally or equitably in relation to the ability of the tax payers. The canon of
equality states that there should be justice, in the form of equality, when it comes to
paying taxes. Not only does it bring social justice, it is also one of the primary means for
reaching the equal distribution of wealth in an economy.
Convenience: According to this canon, tax should be collected in a convenient manner
from the tax payers. It states that all this should easy, convenient and taxpayer-friendly.
The time and manner of payment must be convenient for the tax payer so that he is able
to pay his taxes in due time.
Economy: This principle suggests that the cost of collecting a tax should not be
exorbitant but be the minimum. It states that the cost of collecting taxes should be as
minimum as possible. There should not be any leakage in the way.
Certainty: The canon of certainty ensures that the taxpayer should have full knowledge
about his tax payment, which includes the amount to be paid, the mode it should be paid
in and the due-date. The tax payers should be well-aware of the purpose, amount and
manner of the tax payment. Everything should be made clear, simple and absolutely
certain for the benefit of the taxpayer.
3 Additionals
Productivity: This implies that a tax must yield sufficient revenue and not adversely
affect production in the economy. This implies that the revenue yield from any tax must
be a sizable one. Further, this canon states that only those taxes should be imposed that
do not hamper productive effort of the community. A tax is said to be a productive one
only when it acts as an incentive to production.
Visibility: This implies that not all the taxes should be visible to tax payer. For example,
VAT = invisible; Income tax = visible.
Political Consideration: This suggests that a tax should be determined on the ground of
political consideration.

6. Tax assessment system -> official, self-assessment, withholding --> definition and
explanation + opinion. What tax system that is best for Indonesia?
Official: Fiscus calculate the tax levied to taxpayers. Tax payers are passive.
Self-Assessment: A tax collection system that gives credence to the taxpayer to fulfill
and implement its own obligations and taxation rights. Taxpayers calculate, paid, and
report the tax by themselves.
Withholding: Tax collection system that gives credence to a third party/witholder (not
the tax authorities or the taxpayer) to fulfill their tax obligations. Some tax being
collected through withholder. Withholding Tax System is a system of taxation in which
 third parties was entrusted (obligations), or empowerment (empowerment) by UU KUP
to deduct income tax from the income paid to the taxpayer.

7. Tariff --> definition and example

Fixed: Tax tariff already stated in specific number or amount. Ex: stamp duty.
Proportional: Tax tariff stated in a percentage, in a single percentage. Proportional rate
uses a fixed percentage regardless of the tax bases. Ex: VAT.
Progressive: Tax tariff stated in percentage and increase with the increase in the tax
bases. It is a tax in which the tax rate increases as the income increases. A progressive tax
takes a larger percentage of income in taxes from the high-income group than it does
from the low-income group. On the other hand, people with lower income, pay a smaller
% of their income in taxes. Under progressive taxes, the lowest income group including
ones below the poverty level would pay little to nothing in taxes. Ex: Income tax.
Degressive: Tax tariff stated in percentage, and decrease with the increase in the tax
bases. It is a tax imposed in such a manner that the tax rate decreases as the amount of
taxable income increases. The higher income group pays less in taxes than the lower
income group. In case of regressive taxes there is an inverse relationship between the tax
rate and the taxpayer's ability to pay.
Ex: Not exist in Indonesia, exist only in theory.

Exercise Morning Class

Question 1
Andi is a man working on a factory PT Y. Andi receive salary amounted Rp. 7 million
and allowance amounted Rp. 500.000 PT Y and Andi paid insurance premium amounted
Rp. 200.000 and Rp. 100.000 respectively. Andi also paid pension expense amounted Rp.
150.000 and paid old age allowance expense amounted Rp. 100.000. Andi is married
with two children (second child is born on Feb 2016). Calculate Andi's income tax for
year 2016.
Question 2
Soni has workshop business in his house. His workshop business generated revenue
amounted Rp. 5 billion and expenses amounted Rp. 4 billion. Last year Soni has a net
loss amounted Rp. 700 million. Soni is married with three children. Income tax credit for
this year totalled Rp. 10 million. Calculate income tax over or underpaid for Soni

Question 3
Anto is a doctor that opening a doctor practice in his house. Andi's revenue for 2016 is
Rp. 700 million and expenses Rp. 500 million. Andi is single and don't have any
dependants. Income tax credit of Andi totalled Rp. 10 million. Calculate income tax over
and underpaid for Andi using bookkeeping method.
Question 4
Same like question 3 but calculate income tax over/underpaid for Andi using 30%
deemed profit rate

Answer for question 1

Salary 7,000,000
Allowances 500,000
Insurance Premium 200,000
Total Gross Income 7,700,000

Deductions
Occupational Expense 385,000
Pension Expense 150000
Old Age allowance Expense 100000
Total Deductions 635,000
Net Income 7,065,000
Annual Net Income 84,780,000

Exemption:
Individual 54000000
Married 4500000
Allowance (1 Kid) 4500000
Total Exemptions 63000000

Taxable Income = 21,780,000

Income tax
0-50 million 1,089,000 Per year
90,750 Monthly

Answer for question 2

Revenue 5,000,000,000
Expense 4,000,000,000
Net Income 1,000,000,000
Loss Carryforward 700,000,000
Exemptions
Individual 54,000,000
Married 4,500,000
Children 13,500,000
Total Exemptions 72,000,000
Taxable Income 228,000,000
Income Tax
5% x 50000000 2,500,000
 15% x 178000000 26,700,000
Income Tax 29,200,000
Income Tax Credit 10,000,000
Income Tax underpaid/overpaid 19,200,000 underpaid

Answer for number 3

Revenue 700,000,000
Expense 500,000,000
Net income 200,000,000
Loss carryforward -
Exemption 54,000,000
Taxable income 146,000,000
Income tax
5% * 50 000 000 2,500,000
15% * 96 000 000 14,400,000
Total income tax 16,900,000
Income tax credit 10,000,000
Income tax underpaid/overpaid 6,900,000 underpaid

Answer for number 4

Revenue 700,000,000
Deemed profit rate 30%
Net Income 210,000,000
Loss carryforward -
Exemptions 54,000,000
Taxable Income 156,000,000
Income Tax
5% x 50000000 2,500,000
15% x 106000000 15,900,000
Total Income Tax 18,400,000
Income Tax Credit 10,000,000
Income Tax Underpaid/Overpaid 8,400,000 underpaid

Exercise (Afternoon Class)

Question 1
Beni work as an accountant at KPMG. Beni's salary per month is Rp. 7 million.
Allowance amounted Rp. 1 million. KPMG and Beni paid insurance premium Rp.
200.000 and Rp. 150.000 respectively. KPMG and Beni also paid pension expense
amounted Rp. 200.000 and Rp. 100.000 respectively. Beni start working at KPMG since
March 2016. Beni is single and dont have any dependant. Calculate income tax for Beni
for year 2016
Question 2
Joni has a small restaurant at his house. Revenue is Rp. 7 billion and expense is Rp. 6
billion. Last year Joni suffered net loss amounted Rp. 800 million. Joni is married with
three children. Income tax credit totalled Rp. 20 million. Calculate income tax
over/underpaid

Question 3
Deni is a public accountant that has small public accounting firm. During year 2016, he
has revenue Rp. 500 million and expenses Rp. 400 million. Deni is married with one
children (son born on 3rd January 2016). Income tax credit totalled Rp. 10 million.
Calculate income tax under/overpaid

Question 4
Same question with number 3, but calculate income tax under/overpaid using deemed
profit rate of 25%.

Answer of Question 1
Gross Income
Salaries 7,000,000
Allowances 1,000,000
Insurance Premium paid by employer 200,000
Total Gross Income 8,200,000
Deductions
Occupational Expense (5%x8200000) 410,000
Pension Expense paid by employee 100,000
Total Deductions 510,000
NI/Month 7,690,000
NI/Year (Since March) 76,900,000
Exemptions
1.Employee 54,000,000
Total Exemption 54,000,000
Taxable Income 22,900,000
Income Tax Payable 1,145,000 yearly
114,500 monthly

answer of question 2
revenue 7,000,000,000
expense 6,000,000,000
net income 1,000,000,000
loss carryforward (800,000,000)
exemptions
 individual (54,000,000)
married (4,500,000)
dependents (3x4.500.000) (13,500,000)
taxable income 128,000,000
income tax
5%x 50.000.000 2,500,000
15%x 78.000.000 11,700,000
14,200,000

income tax credit 20,000,000

income tax underpaid/overpaid 5,800,000 overpaid

answer number 3
revenue 500,000,000
expense 400,000,000
net income 100,000,000
exemption
individual 54,000,000
married 4,500,000
total exemption 58,500,000
taxable income 41,500,000
income tax 2,075,000
income tax credit 10,000,000
7,925,000 overpaid

answer for question no 4

Revenue 500,000,000
Deemed ProfitRate 25%
Net Income for Year 125,000,000
Exemptions
Individual 54,000,000
Married 4,500,000
Dependant 0
Total Exemptions 58,500,000

Taxable Income 66,500,000

Income Tax Payable

5% X 50.000.000 2,500,000
15% X 16.500.000 2,475,000
 4,975,000

Income Tax Credit 10,000,000

Income Tax Overpaid 5,025,000

Exercise 2 Morning Class

Question 1
PT Y is a company that established in 2016. PT Y currently has sales amounted Rp. 75
billion. COGS Rp. 65 billion and operating expenses Rp. 5 billion. Income tax credit for
PT Y is income tax credit article 22 Rp. 200 million, article 23 Rp. 100 million and
article 25 Rp. 150 million. Calculate income tax over/underpaid

Question 2
PT Z is a company that established in 2011. The data of net income/loss for PT Y are as
follows: 2011: Net loss Rp. 1 billion, 2012 net income: Rp. 200 million, 2013 net
income : Rp. 300 million, 2014 net loss Rp. 100 million, 2015 net income: Rp. 400
million. PT Z has sales revenue for year 2016 Rp. 80 billion, operating expenses Rp. 75
billion. Income tax credit article 22 Rp. 100 million, article 24 Rp. 50 million and article
25 Rp. 150 million. Calculate income tax over/underpaid

Question 3
PT X is a company that established in 2016. PT Y currently has sales amounted Rp. 25
billion. COGS Rp. 6 billion and
operating expenses Rp. 1 billion. Income tax credit for PT Y is income tax credit article
23 Rp. 50 million
and article 25 Rp. 100 million. Calculate income tax over/underpaid

answer for no 1:

for income exceeding 50 bill

revenue 75,000,000,000
expense 70,000,000,000
net income 5,000,000,000
tax loss carryforward 0
taxable income 5,000,000,000
income tax(not eligible) 1,250,000,000 (25%*5.000.000.000)

income tax credit

article 22 200,000,000
article 23 100,000,000
article 25 150,000,000
total income tax credit 450,000,000
income tax underpaid 800,000,000

Question 2
Revenue 80,000,000,000
Expense 75,000,000,000
Net Income 5,000,000,000
Tax loss carryforward 200,000,000
Taxable income 4,800,000,000
Income Tax 1,200,000,000 (4.800.000.000x25%)
Income Tax Credit
article 22 100,000,000
article 24 50,000,000
article 25 150,000,000
Total tax income credit 300,000,000
Income tax Underpaid/overpaid 900,000,000 Underpaid

Question 3

Revenue 25,000,000,000
COGS 6,000,000,000
Expense 1,000,000,000
Net Income 18,000,000,000
Tax Loss Carryforward -
Taxable Income 18,000,000,000

Taxable income eligible for tariff reduction 3,456,000,000

Taxable income not eligible for tariff reduction 14,544,000,000

T.I eligible for tariff reduction x 12.5% 432,000,000

T.I not eligible for tariffreduction x 25% 3,636,000,000

Income Tax 4,068,000,000

Income Tax Credit

Article 23 50,000,000
Article 25 100,000,000 150,000,000
Income Tax Overpaid/Underpaid 3,918,000,000 Underpaid
Questions 4
PT U is a small medium enterprise. PT U producing a shoe that sold for Rp. 50.000/unit.
Total number of shoe sold during the first three months in 2016 are 30.000 unit, 31.000
unit and 29.000 unit respectively. Total shoes that being returned for many reasons
(defected, not suitable, etc) for first three months are 0 unit, 2.000 unit and 5.000 unit
respectively. Determine the revenue that becoming a basis for income tax calculations
and calculate income tax that must be paid for the first three months.

Questions 5
Mr A is an enterpreneur that sold the computers. Total sales of computers for month
February, March, and April are 100, 70, and 50 units respectively. Price per computers
for month February, March, and April are Rp. 10 million, Rp. 9,5 million, and Rp. 9
million respectively. For month March, there is a direct discount 10% given to all
computer purchases. Determine the revenue that becoming a basis for income tax
calculations and calculate income tax that must be paid for first three month (Note: Mr A
business classified as having revenue less than 4,8 billion per years)

Answer for question 4

Revenue
50.000x30.000 1,500,000,000
50.000x31.000 1,550,000,000
50.000x29.000 1,450,000,000
Sales return and allowances
50.000x0 -
50.000x2.000 100,000,000
50.000x5.000 250,000,000
Income tax per month
15,000,000
14,500,000
12,000,000

Answer for number5

Month Unit Price Discount Total Discount Revenue
Feb 100 10,000,000 1,000,000,000
March 70 9,500,000 10% 66500000 598,500,000
April 50 9,000,000 450,000,000

Income Tax
Feb 10,000,000
March 5,985,000
April 4,500,000
Exercise 2 Afternoon Class

Question 1
PT G is a company that established in 2011. In year 2016 the sales revenue is Rp. 15
billion, COGS is Rp. 10 billion, operating expense Rp. 4 billion. Last year, PT G has net
loss amounted Rp. 500 million. Income tax credit are article 22 Rp. 100 million, article
23 Rp. 125 million and article 25 Rp. 200 million. Calculate income tax over/underpaid

Question 2
PT H is a company that established in 2016. In year 206 the revenue is Rp. 800 billion,
COGS is Rp. 650 billion, and operating expenses is Rp. 200 billion . Income tax credit for
year 2016 are income tax article 25 amounted Rp. 50 billion. Calculate income tax
ovder/underpaid

Question 3
PT I is a company that established in 2010. During 2010, it had net loss amounted Rp. 10
billion, 2011 net income Rp. 2 billion, 2012 net income Rp. 3 billion, 2013 net income
Rp. 1 billion, 2014 net income Rp. 1,5 billion, 2015 net income 1 billion. For year 2016 it
has revenue Rp. 55 billion and expenses Rp. 40 billion. Total income tax credit Rp.
750 million. Calculate income tax over/underpaid.

Answer For Question 1

Revenue 15,000,000,000
Expense 14,000,000,000 (Cogs+Opr. Exp)

Net Income 1,000,000,000

Tax Loss Carryforward 500,000,000
Taxable Income 500,000,000

Taxable Income eligible for tariff

4.800.000.000*500.000.000/15.000.000.000 160,000,000

Taxable Income not eligible for tariff reduction

500.000.000-160.000.000 340,000,000

Income Tax
12,5%*160.000.000 20,000,000
25%*340.000.000 85,000,000
105,000,000
Income Tax Credit
Article 22 100,000,000
Article 23 125,000,000
Article 25 200,000,000
425,000,000
Income Tax Overpaid 320,000,000

Question no. 2
Revenue 800,000,000,000
COGS 650,000,000,000
Operating Expense 200,000,000,000
Net Loss (50,000,000,000) amounted to the loss carryforward for year 2017

No need to pay income tax for year 2016 because experience loss

Income tax -
Income tax credit 50,000,000,000
Income tax overpaid 50,000,000,000

question 3

revenue 55,000,000,000
expense 40,000,000,000
net income 15,000,000,000
Tax Loss Carryforward - *maximum for 5 years

Taxable Income 15,000,000,000

Income tax 3,750,000,000
Income tax credit 750,000,000
income tax underpaid 3,000,000,000

Question 4
PT H is a company that classified as SME. PT H established in 2016. During the first
three months, it succeesfully sold 20.000, 35.000 and 45.000 units respectively. The price
of the goods is Rp. 6.000/unit. There is a return of goods for first three months due to
defect issues. The returned goods were 1.000, 1.500 and 2.000 units respectively.
Calculate the revenue that becoming a basis to calculate income tax, and calculate income
tax that must be paid by PT H for the first three months.

Question 5
Mr B is an enterpreneur who sell the shoes. During the first three months of 2016, Mr B
sold 2.000 units, 2.500 units, and 2.200 units respectively. The price are varied by
months. The price for the first three months is Rp. 50.000, Rp. 55.000, and Rp. 60.000
respectively. 50% units sold in 2nd month are eligible for direct discount 10%, and 500
units were returned due to defect. Calculate the revenue that becoming a basis to
calculate income tax and calculate income tax that must be paid by Mr B.

Question 4
Goods Sold (Units Sold * Price)
Month 1 120,000,000
Month 2 210,000,000
Month 3 270,000,000

Goods Return (Units returned * Price)

Month 1 6,000,000
Month 2 9,000,000
Month 3 12,000,000

Revenue permonth
Month 1 114,000,000
Month 2 201,000,000
Month 3 258,000,000

Income Tax Permonth

Month 1 1,140,000
Month 2 2,010,000
Month 3 2,580,000

Answer 5
Month Unit Sold price/unit Total price tariff Income tax

1 2000 Rp50,000 Rp100,000,000 1% Rp1,000,000

2 2500
(1250-500) Rp49,500 Rp37,125,000
1250 Rp55,000 Rp68,750,000
Rp105,875,000 1% Rp1,058,750

3 2200 Rp60,000 Rp132,000,000 1% Rp1,320,000

Rp3,378,750